WHY MBA GRADUATES MAKE TERRIBLE ENTREPRENEURS

Planning is the first and most important step to a successful business; that’s the first thing you’re taught in business school. And that’s the first step to success; figure out what your business should do in the future in a manner so detailed that each and every step cleverly tackles anything and everything that the competitive business world has to throw at you. So what you have, in theory, is a step-by-step plan that guides you through the different phases of a business right in front of you before you even get started. Then you get into the other aspects that further provide the stepping-stones to a well-rounded business professional.

“MOST BUSINESS SCHOOLS FOCUS ON A CORE CURRICULUM OF FINANCE, ACCOUNTING AND OPERATIONS. RELATIVELY FEW OFFER CLASSES ON BUILDING STARTUPS, ENTREPRENEURIAL SELLING AND FUNDRAISING NEGOTIATIONS.”

In this way, theoretically, MBA graduates are equipped with all the analytical skills that deem them the perfect people to start and run a successful business. Ironically, at times, they are considered the worst people to become entrepreneurs.

However, if you look at it, saying MBA Graduates make bad entrepreneurs is like saying studying in medical school makes a person a bad physician. Education sets the platform to any successful venture, but it isn’t exactly about the academics here.

An MBA course refines your analytical skills, it makes you think and carefully scrutinize and evaluate your plans and decisions. And at times this can work against someone who is looking to begin a startup. This is because all that analyzing and planning tends to make MBA graduates extremely risk averse.

Getting an MBA is like acquiring a tool that allows you to waddle into industry with a safety rig on, which allows you to leave one industry and enter another. Starting a company is like cannonballing into risks, something that you are taught to mitigate throughout your course.

While graduate school drills you with the knowledge and skills that you might face in the real world it isn’t exactly what you need when you set out on startups. Entrepreneurship involves tackling unknown problems with unknown solutions.

They are tackling an unknown problem and need to apply the right tactics to quickly validate their assumption. Also, most business schools focus on a core curriculum of finance, accounting and operations. Relatively few offer classes on building startups, entrepreneurial selling and fundraising negotiations. And for those that do, the MBA students tend to think they are always the exception to the rule, and won’t encounter the challenges inherent in starting a company until it’s too late.

Much of the training in business schools instills a planning-mindset. In other words, we are taught in school, particularly business school, that the way to optimize an outcome is to plan to be successful and then execute on the plan. Of course this advice actually works (sometimes) when we know the outcome we want to achieve and the path to get there. But the planning mindset works terribly when the problem or solution are unknown because we waste time and money executing on a guess that often turns out to be wrong. In contrast, we need to adopt an experimentation mindset, meaning a clear recognition that we don’t have the answer and we are going to experiment as quickly and efficiently as possible until we discover the right answer. In entrepreneurship, the key is to have the right process. Namely, identify your assumptions, use a rapid prototype to test your assumptions, and adjust.

Many entrepreneurs, even ones who are not MBA graduates fall back on the planning mentality. This is mainly because entrepreneurial problems are ambiguous and uncertain. In deep ambiguity, planning feels like progress. Indeed, making a plan and hitting milestones feels like you are moving forward but can lead you straight into failure. Because of this, they are reluctant to enter the experimentation mindset.

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